For us, the cost of going from good to great is a clean break from the past. To enable the fantastic user experiences you’ve seen in the Windows Phone 7 Series demos so far we’ve had to break from the past. To deliver what developers expect in the developer platform we’ve had to change how phone apps were written. One result of this is previous Windows mobile applications will not run on Windows Phone 7 Series.

To be clear, we will continue to work with our partners to deliver new devices based on Windows Mobile 6.5 and will support those products for many years to come, so it’s not as though one line ends as soon as the other begins.

Unfortunately for Microsoft, that means Windows Phone 7 will start from square one when it comes to applications. Surely, Microsoft will work with developers to launch the platform with a good number of apps.

But it won’t be 150,000 apps, like the Apple iPhone supports, or even Google Android’s more modest 20,000.

While the decision does abandon existing Windows Mobile apps and their developers, it’s not all that surprising. After all, Windows Phone 7 is a new platform with a new user interface.

Who knows how many Windows Mobile app developers will rework their products for Windows Phone 7 – probably a fair amount. But Microsoft needs to restart its mobile business with a clean slate, Arvani said.

“There’s only so much you can to do something that’s out of date, so they made a clean break,” she said of Microsoft. “The target for developers becomes much narrower for new applications, because it will only be Windows Phone 7 that will be able to run them.”

Is there much point in creating apps for Windows Mobile 6.5 anymore? And with Windows Phone 7 slated for a holiday release, is there much point in buying a Windows Mobile phone before then?

By announcing the OS in February and confirming a lack of forward compatibility Thursday, Microsoft has opened a huge chasm in its mobile timeline. Microsoft will have to offer deep discounts or attractive promotions for Windows Mobile to get any meaningful revenue.

“Unless I’m dying to have something in Windows (Mobile) 6.5 – which I can’t think of anything,” Arvani said, “it’s going to be really hard for Windows Mobile 6.5 phones to be sold.”